Company Overview

Invesco DB US Dollar Index Bearish Fund is an exchange-traded fund (ETF) that aims to track changes in the Deutsche Bank Short US Dollar Currency Portfolio Index. The ETF does this by taking short positions in currency futures contracts linked to the US dollar versus a basket of other major currencies. The company’s performance also reflects interest income from its holdings in US Treasury bonds and money market funds.

Financial Performance

In the first quarter of 2024, the ETF incurred a net loss of $0.43 per share, compared to net income of $0.28 per share in the first quarter of 2023. The total return of the fund at net asset value was -2.33% in the recent quarter, versus +1.51% in the prior year period.

The losses in early 2024 were driven by a rise in the US dollar versus other major currencies, which led to declines in the value of the fund’s short currency futures positions. Meanwhile, interest income earned on the fund’s Treasury bond and money market holdings provided a partial offset.

Revenue and Profit Trends

As an ETF, the fund does not have traditional revenue and profit metrics. Its financial performance is impacted largely by changes in the value of the currency futures contracts it holds as well as by the amount of interest income earned on collateral holdings like Treasury bonds.

In the latest quarter, the 2.33% decline in the fund’s net asset value indicates it incurred meaningful losses on its currency futures positions. However, interest income increased from $0.17 per share in Q1 2023 to $0.21 per share in Q1 2024 thanks to rising interest rates. This interest income helped offset a portion of the currency futures losses.

Balance Sheet Analysis

The fund has a strong liquidity position, with the bulk of its assets held in cash equivalents and margin collateral like Treasury bonds. As of March 31, 2024, the fund had total assets of $XXX million, primarily composed of $XXX million of US Treasury Obligations, $XXX million invested across money market mutual funds and T-Bill ETFs, and $XXX million in receivables/payables related to currency futures positions. The fund finances its assets largely through the issuance of shares to authorized participants.

Future Outlook

Going forward, the performance of the Invesco DB US Dollar Index Bearish Fund will continue to be driven mainly by changes in the relative value of the US dollar compared to peer currencies like the Euro and Japanese Yen. If the US dollar strengthens further in 2024, the fund is likely to see additional losses on its currency futures positions. However, rising interest rates could provide a partial offset via higher income generation on Treasury and money market fund collateral holdings. The fund will aim to maintain short exposure to the US dollar in order to track its benchmark index over time.

Tables:

Net Asset Value per Share

Total Return at Net Asset Value

Interest Income Performance